Loading judgment…
Facts
The assessee, a fertilizer trader, did not file his Income Tax Return for A.Y. 2016-17 but deposited Rs. 1.46 crore cash in his bank account. Assessment proceedings under Section 147 were initiated, leading to an ex-parte assessment under Section 144, treating the entire deposit as unexplained money under Section 69A, as the assessee failed to respond to notices. The CIT(A) also dismissed the assessee's appeal ex-parte due to non-response to notices, despite the assessee's claims of illness and requests for adjournment.
Held
The Tribunal, noting that both the assessment and the first appeal were decided ex-parte and considering the assessee's submission of illness and subsequent readiness with audited documents, decided to grant one final opportunity. It set aside the orders of both the CIT(A) and the AO, remitting the matter back to the AO to decide the issue de novo after giving the assessee a reasonable opportunity of being heard and considering any documents filed.
Key Issues
Whether the ex-parte assessment and appeal dismissal were justified without granting the assessee a fair opportunity to present his case, especially given claims of illness and now available documents, and if the entire cash deposit could be treated as unexplained money without considering related purchases/debits.
Sections Cited
147, 148, 142(1), 144, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 30/04/2024 in respect of the A.Y. 2016-17 and raised the following grounds: “a) The Commissioner of Income Tax (CIT) Appeals ought to have considered debits in the bank account to consider such amounts as purchases and ought not to have taxed the entire credit in the bank account presuming it as unexplained cash credit. b) The assesse plea to the respected Income Tax Appellate Tribunal (ITAT) to kindly consider the audited financial statement as well as audited report as an additional evidence which could not be placed before the lower adjudicating authorities. c) The appellant craves leave to add, amend, alter, modify or omit any of the aforesaid Grounds of appeal as occasion may arise of demand”
2. The assessee is a trader in fertilizer and related products and during the assessment year, he has not filed his return of income but based on the information available that the assessee had deposited cash of Rs. 1,46,23,000/- into his bank account, assessment proceedings u/s. 147 was initiated. The assessee had not filed any objections to the notices issued u/s. 148, 142(1) and therefore the AO had made an assessment u/s. 144 of the Act in which the AO had treated the entire cash deposits as unexplained money u/s. 69A of the Act. As against the said assessment order, the assessee filed an appeal before the Ld.CIT(A) and contended that the AO had not considered the debits in the bank account and therefore submitted that the order of the AO is an arbitrary one. During the appellate proceedings, the Ld.CIT(A) had issued notices to the assessee but the assessee had not responded to the earlier 3 notices and filed adjournment petitions to the last two notices and therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the appeal filed by the assessee. As against the said order of the Ld.CIT(A), the present appeal has been filed before this Tribunal.
3. At the time of hearing, the Ld.AR submitted that the assessee was suffering from illness and therefore he was not able to concentrate on the business activities. The Ld.AR further submitted that after the recovery from illness, the assessee submitted the documents in order to get the audit report but by the time the Ld.CIT(A) had dismissed the appeal without granting sufficient time. The Ld.AR further submitted that all the details are now available with the assessee and prayed an opportunity to submit the details before the AO since the assessment order is also an ex-parte order.
The Ld.DR submitted that the AO as well as the Ld.CIT(A) had granted sufficient opportunities but the assessee had not utilised the same and therefore no lenience could be shown on the assessee and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have considered the submission made by the assessee that he was suffering from illness and therefore he was not able to attend the required duties for 3 or 4 months and therefore the documents required for auditing could not be made available to the auditor in time and therefore he was not able to respond to the notices issued by the AO. We have also considered the submission that when the Ld.CIT(A) had issued notices, on the last two occasions, since the auditing of the books of accounts were about to complete and therefore the assessee had sought for an accommodation in order to produce the records before the Ld.CIT(A) but unfortunately, the Ld.CIT(A) without granting any further time had dismissed the appeal.
In view of the fact that the assessment as well as the appeal has been decided ex-parte and also considering the submission made by the assessee that he fell sick and also the fact that the books of accounts were now audited, we are of the view that one more opportunity may be granted to the assessee to put forth his case before the AO.
We are therefore setting aside the order of the Ld.CIT(A) as well as the AO and remit the issue to the file of the AO to decide the issue denovo after considering the various documents, if any, to be filed by the assessee and also after granting a reasonable opportunity of being heard to the assessee.
Order pronounced in the open court on 03rd February, 2025.